A solid rebound from Fridays OPEX has put SPY at new highs.
With the market at these lofty levels its actually become harder to find pockets of opportunity to exploit although the VIX is till in the low 14s....meaning a further drop down to "normalized" 12 levels should produce a potential gain to SPY of approx. 15%...not impossible....the market is always full of surprises....but its unclear what would push the markets through the current overhead resistance levels.
The best odds now favor the DOW over either the Qs or SPY and if we do see a new bull trend one of the most likely big gainers may well be in the financial sector...XLF...which has so far failed to show much mojo and is due for a bump.
One of the sectors that has done very well recently is energy and here's a look at how my sister has played the sectors using M3.
First, we start with a simple one component run of M3 using SPY as a benchmark to establish a baseline.
Then we input the energy sector proxies using XLE, USO and UNG. Our expectation is that the horrible weather the country has endured for the past few months will have goosed demand (and prices) relative to gains in SPY.
This is the approach my sister has used since the first of the year and the results have been a surprisingly liner equity curve.